This scene was shot, as evidenced by the photos included above, as well as this account from Ron Rosenbaum in the New York Observer, reporting on a screening of Chinatown in San Pedro:

"So
I was disappointed when Towne turned out to be a no-show, but then the
substitute guest, Chinatown cinematographer John Alonzo, turned out to
have an absolutely amazing revelation to make–a bombshell. About a
lost scene from Chinatown, one that was filmed but had to be dropped.
But one that, to my mind, offers a powerfully eloquent, beautifully
oblique expression of its vision. One that speaks to the war of the
prigs against popular culture as well.

The
way Mr. Alonzo describes it, the lost scene was part of a sequence
late in the film, I believe the one in which Jack Nicholson, as private
dick Jake Gittes, confronts John Huston, as the obscenely rich, richly
obscene Noah Cross, that monster of terror and appetite beneath the
facade of rough-hewn elegance. According to Mr. Alonzo, the lost scene
had Huston telling Nicholson to kneel down in the driveway as he
gestures toward a mound of recently deposited equine excrement. At which
point Huston says:

“This is horseshit, sir. But in the morning it rises with such power!”

Rises
with such power! He’s speaking on a literal level about the steam
rising off the horseshit. Apparently, according to Mr. Alonzo, it was
the inability of the camera to capture the steam on film that led to
the scene’s omission. Sad because, in a more metaphoric way, it’s a
perfect expression of the relationship between nature and culture: Art,
like that rising steam, is an etherealized emanation from the muck and
ferment of human nature."

- Ron Rosenbaum, 'As Bubba the Clown Departs, the Hour of the Prig Descends',The New York Observer, August 21, 2000